Behavioral Targeting Trots Along

For search marketers, Behavioral Targeting (BT) ads may be viewed as “that other advertising” some people try. It’s a valid perspective, as Jupiter Research reported that only 16% of advertisers bought BT last year. At a recent Behavioral Marketing Forum, publishers said that only 2-10% of their revenues came from BT sources.

Search is essentially a direct marketing vehicle, text-based and sold in a CPC economy. BT is essentially a branding vehicle, banner-based and sold in a CPM world. So why does BT matter to searchers?

Maybe they aren’t as radically different as you think. Both contextual text and BT banner ads respond to visitor browsing behaviors. Text ads are shown when you visit, while BT impacts what you see after your visit. These ad types also reflect content displayed on web sites. While text ads are targeted to unique page content, BT ads cater to higher-level category interests.

BT takes things a step further, beyond the domain. The BT providers tap into visitor interests as they navigate all domains in their respective ad networks. It’s a matter of opinion as to whether this is seen as useful or obtrusive, but providers take great pains to enable people to “opt out” if they desire. When participating publishers see better rates than from run-of-network ads, there’s no apparent downside for them.

Until the latest consolidation announcement, it’s been difficult to bet on one BT horse or another. This week, AOL announced its planned acquisition of Tacoda (see ClickZ coverage). The mainstream reaction is that AOL’s deep pockets and network can begin to close the challenging distribution gaps. Tacoda CEO Curt Viebranz says he expects to triple revenues quickly. Is an ownership change going to change his company’s fortunes that quickly?

The horserace gets more interesting when we look at what the Search and Portal providers are offering now. Yahoo SmartAds sound like an innovative response to the BT offerings, by delivering customized banner ads based on live interests. Microsoft has been promoting its own behavioral offerings for a while, where search and other data are optimized for targeted display ads too. Both are making progress, and these efforts have similar goals as the BT networks.

We’re just opening the doors to behavioral targeting. Neither Search nor BT today actually responds to visitors in a fully-customized fashion. All things being equal, everyone sees the same ads when they visit particular pages or are tagged with specific interests. In addition, the text and banner ad networks haven’t intersected much either. Some company is bound to test these boundaries and economics along the way.